Britain's economy showed zero growth in the final three months of 2022 - enough for it to avoid entering a recession for now - but faces tough prospects in 2023 as households continue to wrestle with double-digit inflation, Trend reports with reference to Reuters.
Monthly gross domestic product data for December - when there were widespread strikes in the public sector, rail and postal services - showed a 0.5% contraction, the Office for National Statistics said, larger than the 0.3% forecast.
Even so, Friday's figures will offer some relief to Prime Minister Rishi Sunak and his finance minister Jeremy Hunt, as they seek measures to spur a rebound in their upcoming annual budget on March 15.
Output fell 0.2% in the three months to the end of September - when many businesses shut briefly to mark Queen Elizabeth's funeral - and another consecutive fall in output in the fourth quarter would have met Europe's usual definition of recession.
Any respite is only likely to be temporary. The Bank of England forecast last week that Britain would enter a shallow but lengthy recession, starting in the first quarter of this year and lasting five quarters.
"The UK avoided a recession last year but by the slimmest of margins. Going by recent data revisions, today's figures could well be revised downwards in a few months, painting a very different picture," Deloitte economist Debapratim De said.
British living standards have been hammered by a surge in inflation, which hit a 41-year high of 11.1% in October, and firms and households will also feel an increasing impact from the BoE's rapid increase in interest rates since December 2021.
Output in the fourth quarter was still 0.8% below its pre-pandemic level, in sharp contrast to other major advanced economies which are now above their pre-pandemic size.
ING economist James Smith said he expected Britain's economy to contract by 0.3-0.4% in the first quarter of this year, and by a smaller amount in the second quarter.
"Recession, or at least a technical one, remains the base case. But this looks like it is going to be very mild by historical standards," he said.